Yellow Alert Turns Red as SPX Breaks the Low of the High Day...

On Wednesday the SPX closed at 1,235.23, down -6.36 or -0.51%.  The COMPQ moved down -10.50, the INDU fell -19.07.  The RUT formed a spinning top candle closing down -3.30.  The INDU pulled back to its November horizontal resistance.  The SPX breaks the low of the high day as our Yellow Alert turns Red for short term traders.

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Breadth weakened on Wednesday as decliners led advancers 1.91 to 1 on the NYSE and 1.53 to 1 on the NASDAQ…

Exchange       NYSE          NASDAQ

Advancers      1,035              1,050

Decliners        1,978              1,611

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Index Direction      Confirmation

VIX       Up                Yes – SPX

SOX     Down           Yes – COMPQ

Leading stocks on Wednesday included IPI, SINA, TBT, FAZ, DECK, CF, NTRI, WFMI, VECO, POT, ICE, CAT, X, MOS, TSL, F, UCO, NYX, GES, GR, TIE, DHR, ARUN, LDK, NDAQ

Losing stocks included V, STI, BYI, LVS, PNC, SOHU, FAS, FFIV, SPG, WLT, SNDK, FCX, ZION, UAL, AKS, SKX, CRUS, URE, LXK, USD, MA, AIV, JEC, MHS, AMX, ATI, VMW, ATW, CSTR, TLT, GS, CLF, PCP, DE, CHL, ESI, HANS, A, ACN, FDX, CAKE, BAC, WHR, GME, SWK, SLV, AKAM, UNG, DOW, SWN, CAM, FLS, CMG, CRM, BA, AMD, RVBD, PCLN, HAS, NTES, AGU, NETL

SPX closes below the low of the high day

INDU forms shooting star bearish harami

COMPQ forms shooting star closes below the low of the high day

RUT forms shooting star closes below the low of the high day

All four broad indexes and the TRAN and SOX closed at or above November’s old resistance now new support.

Friday is triple witching expiration which may be adding buying pressure and keeping Wednesday’s pull back at a moderate level.  Many stocks which have already broken below the low of the high day and are forming bull flags or other pull back patterns continued to move lower.

Tuesday’s Yellow Alert for a short term pull back turned Red today.  Short term traders follow your rules, move your stops accordingly and be prepared to exit bullish short term trades on confirmation of your exit signals.  Follow your rules for short term bearish entries.

Interest rates moved higher on Wednesday and bonds moved lower.  The weakness of the Euro seemed to have more influence on stocks than lower interest rates on Wednesday.  Financial stocks XLF did not follow higher but rather continued forming bull flags on the charts of XLF, FAS, WFC, BAC, GS, STI, PNC, NYX, ZION and others.  NYX did establish a new low day while at the same time forming a bullish engulfing pattern.

The SOX dropped another -1.13% closing at 406.03 on Wednesday.  The SOX is still a leading group at this time and is forming a bull flag pattern.  The VIX closed up +0.33 at 17.94.

Only Consumer Staples XLP +0.10% rose on Wednesday, leading all sectors.   This is considered a defensive sector and can signal the start of a short term pull back.

Moves on Wednesday

Continuation – CAT, NUE, WHR, X, TBT, ACN

Horizontal Resistance Breakout –

Bull Flag Bounce –

MACD Divergence Bounce –

Bear Flag Break – GOOG, SKX

Break of Support – BIDU, NFLX, LXK

Setup Charts to Watch

Bull Flag Setups – A, DOW, WLT, ATW, CREE, FFIV, SINA, BYI, VMW, AKS, SNDK, NETL, GME, USD, UNP, UNG, CAKE, AMD, CRUS, DHR

Horizontal Breakout – STLD, HSY, GR

MACD Divergence – LDK, TSL, JASO

Bear Flag Setups –

Horizontal Support Breakout – CMG

Continue to trade with the trend of the chart you are trading.

SPX

Resistance: 1,241, 1,256

Support: 1,220, 1,209, 1,200

Enter bullish trades with a bounce off support and a break above the high of the low day or a break out of horizontal resistance.  Thursday was an entry signal for many stocks.

Enter bearish trades on a break of short term support or a bounce down from the 30 DMA.

The short term 3 day trend is neutral.
The two-month trend is up.
The twelve-month trend is up.

Continue to focus on and trade setups on the charts of the stocks you watch.  Trade with the trend of the chart and follow your rules.

AAPL +0.07 –spinning top below the low of the high day at resistance

AMZN +1.63 – inverted hammer at support

NFLX -5.35 – spinning top above 78.6% Fib retracement

QCOM -0.09 – spinning top at resistance

GOOG -4.61 – black candle breaks the low of the high day confirms shooting star at resistance

BIDU -6.42 – large black candle breaks support

NDX 100 stocks stronger than the NDX include CTRP, JOYG, VRSN, MICC, NIHD, SPLS, WFMI, HSIC, HOLX, WYNN, AMZN, LIFE, CTAS, MSFT and MYL.

Stocks weaker than the NDX: LRCX, FLEX, BBBY, MRVL, FFIV, SNDK, LOGI, NVDA, ALTR, RIMM, VOD, AMGN, EBAY, MU and ILMN.

Stocks to Watch on Thursday
Holding Above 30 DMA
HLF, SINA, CAKE, CAM, UNP, WLT, ATW, SLB, NDAQ, USD, DECK, GR, RVBD, WFMI, BYI, MHS, NETL, FFIV, CAT, X, CREE, GES, HAS, CLF, CRM, INFA, VMW, SNDK, CRUS, FCX, FDX, AKS, A, AMD, DHR, DOW, FLS, GME, ICE, MA, PNC, TBT, UCO, DE, FAS, JEC, STI, SWK, WHR, ZION, ACN, BAC, GS, NYX, ESI, IPI, HSY, NTRI
Moving Above 30 DMA = 0

Moving Below 30 DMA = 5

AIV, ATI, NTRI, PCP, SKX, V

Staying Below 30 DMA
CSTR, NFLX, PCLN, UNG, VECO, ARUN, CF, CMG, RMBS, SOHU, AKAM, GMCR, MCD, SPG, HANS, SWN, URE, AGU, AMX, LVS, POT, TIE, UAL, FAZ, TLT, MOS, NTES, LDK, CHL, TSL, BA, LXK, DLR

Intermediate Term Market Trend: Up – 2 months
Short Term Market Trend: Neutral